Hunt moves to shield hospitals from integration fund failure

The health secretary told last week’s NHS Confederation conference in Liverpool that hospitals should not bear all the risk if investments made from the £3.8bn better care fund failed to curb acute admissions.

Clinical commissioning groups will have to transfer £1.9bn of their allocations into the fund when it is launched in 2015-16, to spend jointly with local authorities on out of hospital care.

Mr Hunt told delegates: “Any out of hospital organisation that is benefiting from extra resources as a result of the better care fund, on the basis that they are going to reduce emergency admissions into hospital, must share some of the risk if what they are doing doesn’t, in fact, reduce emergency admissions.

“By making sure we have a proper risk sharing profile in all the better care fund plans, what we will do is make sure incentives are properly aligned.”

Organisations “benefiting from extra resources” could include GPs, social care or community providers.

Mr Hunt’s words follow months of lobbying by the acute sector, which is concerned that the project could leave hospital trusts out of pocket if financial transfers to out of hospital care do not match changes in acute activity.

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Richard Humphries, assistant policy director at think tank the King’s Fund, told HSJ: “I think there will be huge political anxiety about the financial state of acute hospitals in the run up to the election - a lot of this is about putting protective measures in place.

“Risk sharing is absolutely key, whether or not we have the better care fund.

“Everyone focuses on the £3.8bn [mandatory element of the fund], but everyone is under such huge stress, there needs to be risk sharing across the whole system.”

Requiring better care fund plans to include an element of risk sharing will form part of the strengthened assurance process that the Department of Health has been developing since concerns over the credibility of local plans were raised in the spring.

HSJ understands the DH has not yet decided what form the risk sharing should take, although an “alliance contract” under development in Salford has attracted attention.

Under alliance contracting, a number of providers can be bound together under a single contract with joint financial and operational incentives, through which any gains or losses can be shared.

Health minister Norman Lamb lauded Salford at the conference last week, saying the alliance contract would offer “reassurance for the acute trust” as it said that “costs must be reduced at a greater rate than the loss of income that [the acute trust suffers], and risk and benefit is shared across the system”.

One provider source pointed out that the Salford scheme was more than a contracting mechanism, as it was built on relationships that had been developing locally for many years.

Mr Humphries added that risk sharing could involve commissioners as well as non-acute providers - meaning CCGs or councils would bear some of the risk of a failure to curb acute demand.